As I remember it, protective phone cases pretty much started with the original iPhone. Before that, phones were about practicality first (durable grippy plastics, ergonomic size and shape), and the fashion aspect was secondary or not even a thought. I remember some people (especially in Asia) would customize their phones with third party accessories, but it was all aftermarket, and not widespread.
Then the delicate, expensive iPhone entered the scene, and the entire industry followed suit. And a lot of consumers felt the need for a case. But cases were still mostly optional, only for the more protective/worried/careless/clumsy, because phones at the time were still small one-handed devices, easy to hold and use without dropping. It’s just that if you did drop it, there was a lot more at stake.
But now that phones are huge and even more expensive (and still delicate), cases are mostly mandatory, unless you’re resolved to be extremely careful and mindful, which is a big ask for most people.
I saw exactly how we got here, yet it doesn’t make complete sense to me either. Buying something at least partially for its beauty (look and feel), then covering it up with a case—I understand why, but the contradiction (and irony?) in the situation is undeniable. But it’s what the people want. As long as people want big, expensive, and especially delicate phones, there will most likely always be cases covering them.